SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: July 22, 1999
MATTEL, INC.
------------
(Exact name of registrant as specified in its charter)
Delaware 001-05647 95-1567322
- ------------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identification No.)
333 Continental Boulevard, El Segundo, California 90245-5012
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 252-2000
----------------------------
N/A
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
- ------- ------------
Mattel, Inc. hereby incorporates by reference herein its
press release dated July 22, 1999 regarding its 1999
second quarter results of operations, a copy of which is
included as Exhibit 99.0 attached hereto.
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial statements of businesses acquired: None
(b) Pro forma financial information: None
(c) Exhibits:
99.0 Press release dated July 22, 1999.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MATTEL, INC.
Registrant
By: /s/ KEVIN M. FARR
-----------------------------
Kevin M. Farr
Senior Vice President and
Corporate Controller
(Chief Accounting Officer and
Duly Authorized Officer of
the Registrant)
Date: July 22, 1999
-------------------
<PAGE>
EXHIBIT 99.0
FOR IMMEDIATE RELEASE CONTACT: Mattel, Inc.
July 22, 1999 News Media Investor Relations
Glenn Bozarth Jessica Fisher
310-252-3521 310-252-2703
MATTEL SECOND QUARTER EARNINGS
INCREASE 88 PERCENT TO $.15, BEFORE CHARGES
-------------------------------------------
LOS ANGELES, July 22 - Mattel, Inc. (NYSE:MAT) today reported 1999
second quarter income before charges of $62.5 million, an 81 percent
increase from last year's $34.6 million. Earnings per share for the
quarter, before charges, were $.15, up 88 percent from $.08 per share
in the 1998 quarter. Net sales were $1.04 billion, up 1 percent from
$1.03 billion last year.
Mattel stated in April that it would incur a 1999 second quarter pre-
tax charge, and today announced $345 million in charges related to
integration, restructuring and other non-recurring costs.
For the first half of 1999, income before charges was $70.5 million or
$.17 per share, more than double last year's $30.1 million or $.07 per
share. Sales for the 1999 six months were equal with last year at
$1.92 billion.
"Our growth in EPS reflects a continuing strong gross margin and a 190
basis point reduction in SG&A as a percent of sales, which clearly
demonstrates that we are focused on profitability," Jill E. Barad,
Mattel's chairman and chief executive officer, said. "Our volume
growth was less than we originally projected, due in large part to a
very difficult European environment. As a result, we saw sales
decline 9 percent in our markets outside of the United States.
"Our U.S. business was up 5 percent in the quarter, driven by
increases in Fisher-Price(R), American Girl(R), Mattel Media and The
Learning Company," Barad said. "This was offset by a decrease in
Entertainment and a small decline in Barbie(R) and Wheels, although
shipping for both of them was up for the first six months.
"Our new Barbie products are fueling strong over-the-counter sales, as
evidenced by a 9 percent increase in retail sales for the second
quarter at our key accounts. And Barbie consumer takeaway has
improved even more in the first two weeks of July," she said.
-more-
2-2-2-2-2
"U.S. Fisher-Price has made an excellent comeback, and Worldwide
Wheels continues to be one of our fastest growing categories through
the first half," she said. "Our Entertainment business will get a big
boost with Disney and Pixar's much anticipated `Toy Story 2,' which
now appears to be the #1 entertainment property of the second half.
"Our combined software business had exceptionally strong growth,
exceeding $400 million in shipping in the first six months, and the X3
Computer Microscope from Intel(R)Play(TM) looks to be one of the most
successful new technology products of the holiday season," Barad said.
"And, as we expected, The Learning Company is producing above average
growth in both revenue and margin, which was one of the reasons this
merger made so much sense for Mattel.
"We are now well underway with the integration of TLC and the more
efficient alignment of our $6 billion company," she said. The $345
million in charges announced today include approximately $75 million
related to merger transaction costs, $40 million related to merger
integration and $200 million associated with Mattel restructuring.
These combined actions are expected to result in estimated cost
savings of $50 million in 1999 and at least $400 million over the
following three years. The $345 million in charges also includes an
additional $16 million related to the October 1998 voluntary recall
of the company's Power Wheels(R) vehicles and $14 million for
environmental remediation.
"We remain firmly committed to delivering $1.50 in earnings per share
for the year, before charges," Barad said. "We look forward to a
strong second half, and have therefore resumed our share repurchase
program after a suspension related to our merger with The Learning
Company. We plan to buy back a total of 4 million shares this year."
Mattel is a worldwide leader in the design, manufacture and marketing
of family products. With headquarters in El Segundo, California,
Mattel has offices and facilities in 36 countries and sells its
products in more than 150 nations throughout the world.
Note:
Forward-looking statements included in this release with respect
to the financial condition, results of operations and business of the
company, which include, but are not limited to sales levels,
restructuring and integration charges, special charges, other
non-recurring charges, cost savings, operating efficiencies and
profitability, are subject to certain risks and uncertainties
that could cause actual results to differ materially from those set
forth in such statements. These include without limitation:
the company's dependence on the timely development, introduction
and customer acceptance of new products; significant changes in
buying patterns of major customers; possible weaknesses of
international markets; the impact of competition on revenues and
margins; the company's ability to successfully integrate the
operations of The Learning Company following its merger into the
company; the effect of currency fluctuations on reportable income;
unanticipated negative results of litigation, governmental proceedings
or environmental matters; and other risks and uncertainties as may
be detailed from time to time in the company's public announcements
and SEC filings.
-###-
<PAGE>
<TABLE>
MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------- -------------------------
June 30, June 30, June 30, June 30,
(In thousands, except per share amounts) 1999 (a) 1998 (a) 1999 (a) 1998 (a)
- ---------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $1,040,154 $1,033,509 $1,919,113 $1,918,009
Cost of sales 527,653 524,269 968,115 968,881
---------- ---------- ---------- ----------
Gross Profit 512,501 509,240 950,998 949,128
Advertising and promotion expenses 136,475 135,030 253,234 254,205
Other selling and administrative expenses 245,134 263,402 504,628 505,494
Charge for incomplete technology (b) - 16,826 - 56,826
Restructuring and other charges (b) 345,000 20,887 348,889 36,117
Other income, net (3,961) (7,922) (7,999) (10,069)
---------- ---------- ---------- ----------
Operating (Loss) Profit Before Amortization (210,147) 81,017 (147,754) 106,555
Amortization of intangibles 19,419 33,091 42,428 82,691
---------- ---------- ---------- ----------
Operating (Loss) Profit (229,566) 47,926 (190,182) 23,864
Interest expense 32,314 18,169 61,444 41,263
---------- ---------- ---------- ----------
(Loss) Income Before Income Taxes (261,880) 29,757 (251,626) (17,399)
(Benefit) provision for income taxes (57,546) 25,179 (52,341) 33,980
---------- ---------- ---------- ----------
Net (Loss) Income (204,334) 4,578 (199,285) (51,379)
Less: dividends on convertible preferred stock 1,990 1,990 3,980 3,980
---------- ---------- ---------- ----------
Net (Loss) Income Applicable to Common Shares $ (206,324) $ 2,588 $ (203,265) $ (55,359)
========== ========== ========== ==========
Net (Loss) Income Per Share - Basic (c)(d) $ (0.50) $ 0.01 $ (0.50) $ (0.15)
========== ========== ========== ==========
Average Number of Common Shares
Outstanding - Basic (d) 409,040 384,596 402,786 380,674
========== ========== ========== ==========
Net (Loss) Income Per Share - Diluted (c)(d) $ (0.50) $ 0.01 $ (0.50) $ (0.15)
========== ========== ========== ==========
Average Number of Common and Common
Equivalent Shares Outstanding - Diluted (d) 409,040 423,407 402,786 380,674
========== ========== ========== ==========
</TABLE>
<TABLE>
MATTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, June 30, Dec. 31,
(In thousands) 1999 (a) 1998 (a) 1998 (a)
- -------------- ----------- ----------- -----------
ASSETS
<S> <C> <C> <C>
Cash $ 88,915 $ 373,788 $ 469,213
Accounts receivable, net 1,387,949 1,361,351 1,150,051
Inventories 717,275 671,271 644,270
Prepaid expenses and other current assets 416,654 349,476 371,772
----------- ----------- -----------
Total current assets 2,610,793 2,755,886 2,635,306
Property, plant and equipment, net 736,474 645,471 763,121
Other assets 1,729,537 1,076,803 1,748,958
----------- ----------- -----------
Total Assets $ 5,076,804 $ 4,478,160 $ 5,147,385
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C>
Short-term borrowings $ 658,719 $ 256,454 $ 199,006
Current portion of long-term liabilities 133,348 22,802 33,666
Accounts payable and accrued liabilities 944,722 856,992 1,111,304
Income taxes payable 193,033 176,848 299,058
----------- ----------- -----------
Total current liabilities 1,929,822 1,313,096 1,643,034
Senior notes 500,955 290,955 600,955
Medium-term notes 540,500 520,500 540,500
Long-term debt 43,054 43,297 43,007
Other long-term liabilities 158,923 140,208 149,086
Stockholders' equity 1,903,550 2,170,104 2,170,803
----------- ----------- -----------
Total Liabilities and Stockholders' Equity $ 5,076,804 $ 4,478,160 $ 5,147,385
=========== =========== ===========
<FN>
(a) Consolidated results are restated for the May 1999 merger with The Learning Company.
(b) Represents nonrecurring charges of $267 million and $270 million, net of taxes,
for integration, restructuring and other charges recorded in the second quarter and
the first half of 1999, respectively. Charges for the second quarter and the first
half of 1998 represent restructuring and other nonrecurring charges of $30 million
and $81 million, net of taxes, respectively.
(c) Income per share for the 1999 quarter, before the $0.65 per share effect of the
nonrecurring charges, was $0.15 per share. Income per share for the 1998 quarter,
before the $0.07 per share effect of the nonrecurring charges, was $0.08 per share.
Income per share for the six months ended June 1999, before the $0.67 per share
effect of the nonrecurring charges, was $0.17 per share. Income per share for the
six months ended June 1998, before the $0.22 per share effect of the nonrecurring
charges, was $0.07 per share.
(d) Share and per share data for all periods presented reflect the retroactive effect
of shares issued pursuant to the merger with The Learning Company.
<PAGE>
</TABLE>
